Apple Inc. shares hit a record on optimism the next iPhone will drive a resurgence in sales and help the companyâ€™s services businesses grow.
The stock climbed less than 1 percent to $133.29 at the close in New York, the highest on record. The increase valued Apple at about $699 billion, making it the worldâ€™s most highly capitalized company. Google parent Alphabet Inc. is next at $573 billion, according to data compiled by Bloomberg.
Analysts are predicting a further gain in Apple shares in the next year, based on the average 12-month target price of $142.58, according to data compiled by Bloomberg.
The intraday peak for the shares is $134.54, set in April 2015. The previous closing record was $133 in February of that year. The stock then dropped for more than a year on concern about waning smartphone industry growth and Appleâ€™s prospects beyond the iPhone. However, the company recently reported stronger-than-expected iPhone sales during the key holiday quarter, helping the stock reach a new high.
While the iPhone 7, introduced in September, failed to convince as many existing customers to upgrade as its predecessor did, it succeeded in attracting new smartphone buyers to the Cupertino, California-based company. That bodes well for the next iPhone later this year, which is
expected to be a more substantial
upgrade, according to analysts.
â€œItâ€™s probably just a continuation of the rally following the last quarter report and guidance for the second quarter thatâ€™s giving investors a bridge to the next iPhone that many are getting excited about,â€ said BTIG analyst Walter Piecyk.
The stock was also buoyed by the equity market, with all U.S. benchmarks ending the day at records. The Dow Jones Industrial Average, which includes Apple, climbed past 20,400 for the first time.
More iPhone users increases the chances Apple can sell software, services and subscriptions like Apple Music and iCloud. Services revenue grew 18 percent to $7.2 billion in the most recent period, and the company aims to double the annual total to more than $50 billion by fiscal 2021.
â€œA lot of it comes from the fact that our installed base of devices around the world continues to grow very well,” Chief Financial Officer Luca Maestri said in a recent interview.
Still, Apple has struggled to expand into other businesses that are big enough to move the needle at a company with more than $200 billion in annual revenue. Its secretive car project got off to a slow start and the Apple Watch, while popular, hasnâ€™t come close to matching the iPhoneâ€™s success. The business canâ€™t rely on hit smartphones alone in the future.
“We know what a smartphone looks like and does,” billionaire technology investor Peter Thiel told the New York Times earlier this year. “Itâ€™s not an area where there will be any more innovation.”